22 THE SWISS ANGLE

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Switzerland has a host of banking and investment services that are

exceptional, unique, and often more advantageous than other

offshore havens. A few of the financial products and services

worth reviewing include Swiss bank accounts, personal portfolio management,

Swiss annuities, tax-deferred gold accumulation, premium

deposit accounts, and the Swiss company.

Additional features of Switzerland are reviewed in Part Three. It

expounds many banking, legal, and business professionals who are

either in Switzerland or specialize in Switzerland, and who will gladly

provide in-depth information and advice.

The many engrossing aspects and unique benefits of Switzerland

and Swiss banking can only be adequately shared with readers by devoting

a book solely to this subject. Therefore, my next forthcoming

book, Secrets of Swiss Banking: An Owner’s Manual to Quietly Building a

Fortune, will be published in 2007, with a vaultful of Swiss banking

and investing treasures.

The famous Swiss bank account may just offer the offshore investor

access to the widest banking and investment services to be

found anywhere, so extra coverage is offered here, providing a

glimpse into Switzerland’s many tempting avenues and secrets.

Switzerland is a T-7 tax haven because of its status as a low-tax

haven and banking haven, and its success speaks for itself. Switzerland

and her professionals and institutions have earned their reputation as

“bankers to the world.” Fully one-third of the world’s assets are managed

from this Alpine money haven.

Swiss banks are unsurpassed. The reasons include Switzerland’s

long history in banking, the country’s neutrality and political and

economic stability, and the array of financial services available, some

of which extend beyond our concepts of traditional banking. They include

such financial and investment areas as stocks, bonds, precious

metals, currency trading, margin accounts, forward contracts, asset

management, and more. Swiss banking is famous for its secrecy, an important

historic element and the cornerstone of the business, which has

attracted untold numbers of clients, some among the mysterious and infamous,

since the later half of the nineteenth century. Even today, the

customers of banks are beneficiaries of this tradition, as Switzerland

continues its ironclad defense of its secrecy and its practices.

But, Swiss banking comprises more than just banking . . . it is a

world of financial services and products reflecting the whole investment

community and frankly addresses the investors’ overall financial

health and their big-picture goals. This is beyond the magnitude and

scope of your local banker.

Swiss banking is not finite in its approach, merely seeking to promote

the deposit-taking and lending and borrowing capabilities that

most banks are limited to offering. Individual investors have a powerful

resource at their disposal, and it all begins with the simple act of

having a Swiss bank account.

The Swiss bank account is the door that opens the Swiss vault containing

financial freedom. This includes everything already said

about offshore bank accounts in Chapter 19, the previous discussion

of Switzerland in Chapter 15, and the further information to be

found in Part Three under the Switzerland profile.

Several things happen immediately on opening a Swiss bank account.

You have just internationally diversified your financial holdings

and engaged asset protection for cash, investments, and other valuables.

Of course, a bank account must be denominated in a currency,

which is in fact an investment in its own right. Here, you may decide

which of the world’s many currencies you would rather hold. Has the

news of the U.S. dollar got you down? As it drops, so does your buying

power, taking more dollars to buy the same goods and services. No

wonder you begin to feel poorer and poorer as time goes on. Add inf

lation to the scenario and the story gets worse. Prices inflate upward,

and again it takes more dollars to make purchases and to pay off car

loans, mortgages, and even taxes.

Instead, why not keep your money in a currency that is increasing

in value over time, or at least holding its own, against many other currencies.

Although currencies can f luctuate up and down like any commodity,

one currency has withstood the test of time. This is the Swiss

franc. Most likely, you will keep a local U.S. account in U.S. dollars, so

that you can receive and make payments on a daily basis for your local

needs and obligations. If you have funds on deposit in Switzerland,

your intent is probably to keep these funds secure offshore while investing

from offshore. This makes sense and further facilitates your

ability to make important payments. You may want to implement various

other Swiss services such as having a Swiss annuity, accumulating

gold, setting up a premium deposit account with a Swiss insurance

company, and more. These services can be paid for in Swiss francs,

and by having a Swiss bank account, making these payments is easy

while staying invested in Swiss francs. That way, as the U.S. dollar is

dropping, a trend likely to continue for the unforeseeable future, you

will have peace of mind knowing your Swiss bank account is held in a

strong currency. And typically, the best is the Swiss franc.

As the dollar continues its slide, you are likely making money if

you are holding Swiss francs because the difference between the

value of the dollar and the Swiss currency is profit. And, as the dollar

drops, there will also be further upward pressure on the Swiss franc,

a commodity nearly as good as gold that can be a hedge against all

kinds of economic crises. Then the upward increase in your Swiss

francs will translate to even greater gains between the U.S. dollar and

the Swiss franc, and that goes in your pocket, or rather, is accumulating

in your Swiss franc denominated Swiss bank account in the form

of a more valuable asset, a stronger Swiss franc with more purchasing

power. Now you are getting ahead. And, you are proactively countering

the negative effects that may have undermined your individual

sovereignty, personal well-being, and financial health.

This little Alpine haven has managed customer’s investments for

eons, but in recent times, Switzerland has been grooming itself further

in the role of premier asset manager, deliberately attracting the

well-heeled, high net worth individuals of the world.

Personal portfolio management is also known as “personal asset management,”

which I like to call the “Swiss Millionaire’s Club.” The reason

is simple: The banks that specialize in catering to elite customers,

the crème de la crème of the world’s investors, generally require a

minimum of one million dollars to begin. This is the ultimate place to

keep your cachet secure and working for you while you enjoy retirement,

or even better, while you move on to making your next fortune.

There are over five hundred banks in Switzerland, but a good example

to consider for managing your personal portfolio is the private

bank, Bank Julius Baer, in Zurich. It has a fine reputation and extensive

experience with international investment management. Bank

Julius Baer has been one of the preeminent banks of Europe since

1890, maintaining offices in major financial centers.

Preservation and enhancement of capital is this bank’s main area

of expertise. Their conservative philosophy assures clients of superior

returns and reduced risk by diversifying the portfolio to include a basket

of multicurrencies and multiasset strategies. Only high quality,

highly liquid investments are entertained, further reducing risk.

At Bank Julius Baer, your personal portfolio manager will tailor a

custom investment strategy designed to fit your investment goals, and

is personally responsible for executing investment decisions on your

behalf. This same bank representative is also at your disposal to introduce

you to the bank’s other financial services.

On an individual basis, Bank Julius Baer will accept management

authorization over investment accounts starting at U.S. $1,000,000. If

you wish to manage the account and provide investment instructions

to the bank, the minimum to establish the account is U.S. $500,000.

For further information, or to engage Bank Julius Baer as your investment

advisor and portfolio manager, please refer to their listing

in Part Four: “Financial and Investment Service Contacts.”

Many other Swiss banks provide similar services, and in some

cases, the initial requirement to open a personal portfolio management

account is as low as U.S. $200,000, as in the case of Anker Bank

Lausanne, but this bank is an exception to the rule.

The Swiss insurance business, like the Swiss banks, also has a sterling

reputation in the financial world, and provides some valuable

and unique products and services. The fact that Swiss insurance companies

are not banks gives them certain decisive advantages over

Swiss banks in some strategies. The insurance industry is conservative

and strong, and concentrated among only 20 insurance providers.

The industry is strictly regulated by the Swiss Federal Bureau of Private

Insurance, and never has one failed.

The Swiss annuity offers many benefits similar to the offshore variable

annuity discussed earlier. It is a great way to create retirement income

and receive tax-free withdrawals. And, you can borrow up to 90 percent

of the value of the annuity. (Note: Beware of provisions allowing borrowing.)

This can be helpful on one hand, but on the other, it is a means for

a court or government confiscation (i.e., through exchange controls or

other means) to force you to repatriate the funds even if you have to borrow

to get them. This would defeat the asset protection features. However,

this government action would be an extreme-case scenario.

The principal amount is invested with the Swiss insurance company,

and a contract is created between you and the insurance company

and is known as an annuity. This money accumulates as

tax-deferred savings, so that tax-free compounded interest can really

be effective. It is legal for U.S. citizens to have a Swiss annuity.

The Swiss annuity is benefited by interest, profit sharing and the

appreciation of the Swiss franc. In the past 30 years, money held in a

Swiss annuity would have multiplied by a factor of more than 15

times. Aside from the financial rewards, the Swiss annuity is a simple

way to invest and get armadillo-quality asset protection because the

owners and beneficiaries, under Swiss laws, are expressly protected

from outside creditors or government confiscation. The Swiss annuity

can also be placed in an offshore trust, like an asset protection trust,

and gain even greater asset protection. A Swiss annuity can be custom

tailored to your individual requirements and there are no U.S. reporting

requirements.

A beneficiary can be named, so if the purchaser of the annuity

dies before the annuity distributes, it will bypass probate. The full

value of the annuity will go directly to your loved ones. A beneficiary

can also be someone other than family.

As mentioned, the United States could implement exchange controls,

a real possibility. Besides restricting the free flow of funds in

and out of the United States, they could force investors with known

overseas bank and investment accounts to repatriate funds back to

the states. This would be counterproductive to what you are trying to

accomplish; in fact, it could be devastating. The offshore investment

selection process is then critical to meeting your requirements, especially

if you have an eye toward avoiding future exchange controls.

The annuity would escape these controls. A Swiss bank account and

other types of investments, including offshore trusts, may be in jeopardy under

this scenario, especially financial accounts and investments that are required

to be reported by U.S. law.

The best way to purchase a Swiss annuity is to consult with a financial

advisor in Switzerland who specializes in them. This specialist

will gladly provide you with in-depth information and will assist with

the arrangements. Several reputable firms are listed in Part Four. The

minimum investment is $20,000. Also, a Liechtenstein insurance investment

is an excellent alternative to Switzerland.

Here’s a thought on how to make those Swiss annuity payments,

and also a way to have a Swiss bank account without actually having

one. And, it won’t be subject to U.S. reporting requirements, providing

a high level of confidentiality. The Premium Deposit Account is an interestbearing

account in Swiss francs, established with an insurance company,

usually for making insurance premiums on Swiss annuities and

other insurance products. The deposits are considered “premium deposits,”

and you can deposit as much as you like. Your policy number is

used as reference instead of a bank account number. Interest payments

received from the account are all tax-free. The insurance company will

issue an annual statement. Your insurance premiums will be automatically

deducted from the account.

The Portfolio Bond, or Offshore Insurance Bond, combines the benefits

of offshore banking and offshore insurance to create a unique

holding structure. The best jurisdiction for this is Switzerland. This

device affords excellent asset protection and strong confidentiality.

The customer establishes a relationship by buying a Portfolio Bond

with a Swiss insurance company, essentially a contract like the annuity,

and in turn, the insurance company issues a policy, and then invests

the money at the direction of the customer. You may direct them

to purchase shares of stock, unit trusts, bonds, cash deposits, mutual

funds, and in fact, any investment where value can be established. To

facilitate these financial transactions and insulate the client further,

the insurance company sets up a bank account with a bank chosen by

the customer, and then the funds are deposited with the bank, all of

this being orchestrated by the insurance company on behalf of the

client. Talk about effective! The money grows, tax-free, giving the

principal the maximum ability to compound and increase. Life insurance

coverage can also be purchased through this structure. A nice

feature of the Portfolio Bond is the ability to separate distributions

from the estate and designate a beneficiary directly. On your death,

the money would be quickly dispersed by the insurance company to

the named beneficiaries, usually within a few days of proof of death.

The biggest drawback to the Portfolio Bond may be that some insurance

companies require a minimum of around U.S. $160,000 to purchase

one. It may be that you can find an insurance company, as in

the case of Swiss banks, that will allow you to begin with less. Try

starting with the names of the Swiss investment advisors in Part Four

who can provide Swiss annuities.

The tax-deferred gold accumulation plan is a means to acquire gold

for investment and to inflation-proof yourself without the physical

problems of handling, storage, shipping, and theft. This plan allows

for a single purchase, multiple purchases over time, or monthly accumulation.

For small investors who want to diversify into gold, the

monthly accumulation plan makes it easy and the minimum monthly

amount required to be in the program is $250. You may also stop the

program at anytime. You can also make purchases anytime, and the

additional gold purchases will be added to the gold already being

held. The plan can be tailored to your requirements so it is very f lexible

to the investor’s needs.

Purchases are whole or fractional because they are based on the

dollar amount purchased, not on the ounce. Orders are combined

daily by the bank executing the purchase; therefore the customer is

the beneficiary of the lowest purchase price, giving them more gold

for their money, because the bank buys and sells on the wholesale

bullion dealer market, and the commission rates are heavily discounted.

And, there are not the usual small order surcharges. This is

an economical way to invest in gold, and there are no storage

charges.

The best part of the plan may be relief from worry about your gold

being stolen from your home, personal safe, or other vulnerable

place. The gold can be stored in banks in Switzerland, Canada, or the

United States, and is insured. But, if you want the numerous benefits

that go with Swiss banking and Switzerland, there is only one real

choice. The account is a fiduciary account, and although the gold is

held on the client’s behalf in the name of the bank, it is segregated on

the bank’s books and not subject to creditors or other bank obligations.

It is the property of the bank’s customer—you. The investor receives

regular statements of activity and gold holdings (see Part Four:

“Financial and Investment Service Contacts”).

The tax-free money market account offers higher interest rates, and

the best part is that your earnings accumulate tax free. Funds may be

deposited and withdrawn at anytime without restriction. This is a really

good choice and alternative to a conventional Swiss bank account

as earnings are not subject to the 35 percent Swiss withholding tax. It

is a convenient way for making all types of Swiss and foreign investments,

and also for holding Swiss francs. Several other currencies are

offered including the U.S. dollar and the Euro. The denomination of

the account can change anytime you choose. The minimum to establish

the account is $10,000. The tax-free money market account is offered

by a strong, liquid Swiss investment bank founded in 1965. They

can also provide Swiss securities trading accounts.

The Swiss Company has a certain appeal. Switzerland is a low-tax

haven, therefore a Swiss company could have tax benefits as found in

other tax havens. The choice of corporate vehicles would include the

holding company whose income is generated only from passive

sources; it may completely avoid federal income taxes if it is considered

a pure holding company. Otherwise, as with the domiciliary

company, a non-Swiss company with its home base in Switzerland but

its business conducted elsewhere, would pay around 10 percent in federal

taxes, and there would be low cantonal taxes, too. The Swiss tax

law is complex and it may require extra work and expense to gain the

benefits. Swiss companies are also expensive to incorporate (see Part

Three for a profile of Switzerland and Swiss contacts). Also review the

profile for Campione (Italy), an excellent alternative to Switzerland

or Liechtenstein. If you’re interested in doing business in Switzerland,

look at the Canton of Zug first.

For more information on the financial and investment services

mentioned here, refer to Part Four and the Appendix for company

contacts, and visit www.barberfinancialadvisors.com.